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CMA publishes draft implementing order for open banking
The Competition & Markets Authority has published a draft order, which will mandate open APIs and other pro-competitive measures.
In August this year, the CMA published a decision which would facilitate account switching and also mandate the use of Open APIs. The draft order now published is made under the Enterprise Act and will give legal effect to this decision. It also includes further measures which will require banks to cap their monthly unarranged overdraft charges, help customers avoid unarranged overdraft charges by making banks text them when they are at risk of going overdrawn, and help customers compare the service they get from their bank with other banks.
The draft Order is accompanied by a draft explanatory note and is open for comments to 23 December to be sent to: retailbanking@cma.gsi.gov.uk
What the order does is to set out exact details of the work which must be done and mandates the banks to put this in place ie:
- set up of the Implementation Entity and the Implementation Trustee to devise standards for open APIs;
- publish service quality indicators and send prompts to SME customers;
- extend the current account switching package by providing transaction histories to customers at account closure and up to 5 years afterwards;
- auto-enrol customers in alerts, collect customer mobile phone numbers, and the Order specifies when alerts are to be sent and their content.
- publish a Monthly Maximum Charge with no less prominence than other information;.
- increase the transparency of cost and eligibility of SME lending by publishing and displaying representative APRs for Unsecured Loans and EARs for standard tariff Business Overdrafts;
- larger banks must offer a tool on their website to enable SMEs to obtain an indicative price quote and indication of eligibility with access provided to at least two finance platforms and at least any two comparison sites;
- provide SME banking comparison tools;
- standardise and simplify business current account opening and apply a Standard Information Set when opening a BCA account in defined circumstances.
